Social Security has provided an essential financial safety net for generations of American retirees. However, many people don’t know how to maximize the benefits of this guaranteed financial safety net after a lifetime of hard work. The amount you will receive every month depends on when you claim your benefits, and it is set for life. You must understand the concept of Full Retirement Age (FRA).
According to the Social Security Administration, the FRA is the age at which you become entitled to receive 100% of your Primary Insurance Amount (PIA), or your unreduced monthly benefit.
The Evolution of Full Retirement Age
The Social Security Act of 1935
The federal government established 65 as the default retirement age when President Franklin D. Roosevelt signed the original Social Security Act into law in 1935. Life expectancy was significantly lower.
Many workers paid into the program, but fewer lived long enough to draw benefits for decades. There was no option of early retirement and no reward for delaying retirement.
Early Retirement
In 1956, Congress allowed women to claim reduced benefits at age 62. In 1961, the same option was made available to men.
Late Retirement Credits
Delayed Retirement Credits were introduced in 1972. It only gave a 1% bonus per year for waiting past 65.
The 1983 Amendments
Thanks to medical advancements and improved living conditions, Americans were living much longer, which increased the burden on the Social Security Trust Funds.
Congress passed the Social Security Amendments of 1983 to address this challenge. With the introduction of a gradual increase in the Full Retirement Age, Americans have to work just a little longer before collecting full benefits.
Congress increased the late retirement bonus to 8% per year.
Setting the Standard at Age 67
The government raised the retirement age slowly over several decades. That transition is over now, and the rule is simple: If you were born in 1960 or later, your Full Retirement Age is exactly 67, which is now the universal standard.
Finding Your FRA
Your exact Full Retirement Age is determined by the calendar year you were born, not by when you want to retire, as shown in the table below:
| Year of Birth | Full Retirement Age (FRA) |
| 1943–1954 | 66 years |
| 1955 | 66 years and 2 months |
| 1956 | 66 years and 4 months |
| 1957 | 66 years and 6 months |
| 1958 | 66 years and 8 months |
| 1959 | 66 years and 10 months |
| 1960 or later | 67 years |
The “First of the Month” Loophole
According to the Social Security Administration, you legally attain your next year of age on the day before your birthday. For example, if you were born on January 1, 1960, then according to the SSA, your birth year is 1959. As a result, your Full Retirement Age is 66 years and 10 months, not 67.
The Cost of Claiming Early vs. Reward of Waiting
The Early Filing Penalty: Age 62 to FRA
If you choose to claim retirement benefits as early as age 62, your monthly check will be permanently reduced by 30%. For example, if your full benefit at age 67 is $2,000, claiming benefits at the age of 62 will drop your monthly benefits down to $1,400.
The Delayed Retirement Credit: FRA to Age 70
You get Delayed Retirement Credits if you choose to delay your benefits past your FRA. This increases your monthly benefits by 8% per year. For example, if your FRA is 67 and you claim retirement benefits at the age of 70, your benefits will increase by 24%. If your monthly check at your FRA is $2,000, the new amount after delaying retirement for 3 years is $2,480 per month.
It is important to understand that retirement credits stop accumulating in the month you turn 70. There will be no 8% increase after that.
How FRA Intersects with Working and Taxes
The Social Security Earnings Test
You are subject to the Social Security Earnings Test if you claim benefits before your FRA and also continue to work.
- Claiming benefits years before reaching FRA results in $1 being deducted from your benefits for every $2 you earn above $24,480.
- Claiming benefits the year you reach your FRA results in $1 for every $3 you earn above $65,160.
These withheld benefits are not lost forever. Once you reach your FRA, the SSA recalculates your monthly check upward to gradually pay you back.
There is no cap on your employment income once you reach your Full Retirement Age.
While the FRA is 67, you become eligible for Medicare at age 65. You must enroll in Medicare during the window surrounding your 65th birthday.
Laws and rules related to Social Security retirement benefits can be too complicated for some people. You should speak to one of the experienced local Social Security lawyers in Orlando before you choose to claim retirement benefits.